November 08, 2021

SiteMinder surges on ASX debut

Via afr.com


Aussie unicorn hotel-booking firm SiteMinder has successfully joined the likes of WiseTech and Xero as leading software stocks on the ASX, after shares popped 39 per cent on its first day of trading, soaring from an offer price of $5.10 to close at $7.10.

SiteMinder listed on Monday morning under the ASX-ticker “SDR”, after raising $627 million to list with a $1.36 billion market capitalisation. It closed the day worth $1.88 billion.

SiteMinder helps travel industry operators pull together the backend of bookings made across different sites like Expedia and Booking.com and put out real-time competitive pricing, and was founded in 2006 by Mike Ford and Mike Rogers.

The company’s business model is part recurring subscription revenue, part one-time transaction fees.

In the financial year ending in 2021, SiteMinder generated 83.3 per cent of its pro forma $100.8 million revenue from recurring subscription fees and 16.6 per cent of revenue through transaction fees from subscriber properties.

Like many high-growth technology companies, it has made a loss to date.

SiteMinder chief executive Sankar Narayan told The Australian Financial Review that the timing of the initial public offering was driven by both the expected travel recovery in line with the vaccine rollout and international borders reopening, and SiteMinder’s own progress on its software product roadmap and diversification.

“It’s an opportune time after the travel recovery, and more importantly, we wanted to make sure that SiteMinder had actually delivered and finished a few new products,” he said.

“Once we’d sent out those products and had feedback, we thought it was a good time to explore the public capital markets.”

Beyond a few new independent directors joining the board including Pat O’Sullivan (also a director at carsales.com, Afterpay and TechnologyOne) and Jenny Macdonald (previously Bapcor, Redbubble, Australian Pharmaceutical Industries), Mr Narayan said by and large it will be business as usual at the tech company after listing.

In 2012, the ASX-listed venture capital fund Bailador backed SiteMinder with $5 million, and has continued to invest in the company since. This allowed it to heavily expand overseas into markets like Western Europe and Asia.

Bailador partner Paul Wilson said SiteMinder’s had been a “pretty textbook journey” for an Australian-headquartered software company from start-up to scaled-up global company. Bailador remains the second largest investor in SiteMinder behind BlackRock.

“If it wasn’t for COVID, SiteMinder probably would have become a public company earlier. But COVID also allowed SiteMinder to prove its defensive qualities,” said Mr Wilson, who remains on the board.

“Sankar has extensive experience as the former chief financial officer and chief operating officer of Xero, and he knows what it means to be public facing all the time.”

SiteMinder also counts the likes of Les Szekely, Equity Venture Partners, Ellerston, Pendal Group, Washington H. Soul Pattinson, BlackRock and AustralianSuper as backers. Fidelity is its newest investor, having led SiteMinder’s pre-IPO raise.

“Many of our cornerstone investors have been with us for many, many years, and they’ve known our progress all along from the start of this journey. Others have also joined more recently,” Mr Narayan said.

“Yes it is an IPO, and yes it is about capital, but more important to me is the high-quality investors who have joined who are very knowledgeable and are aligned with where we want to go.”

Following the IPO, SiteMinder co-founder Mike Ford will reduce his 11 per cent stake in the company to 4.5 per cent, and Mike Rogers his 2 per cent stake to 0.9 per cent.

The SiteMinder group is also in the process of defending a legal matter with its former Ukrainian contractors worth $1.9 million.

Senior portfolio manager at First Sentier Investors Jason Lye, who has bought into SiteMinder, said Monday’s IPO saw the company put itself alongside the likes of Atlassian, WiseTech, Altium, Xero and Serko as an example of a high-quality Australasian software as a service company, that had become recognised as a global market leader.

“SiteMinder shares many parallels with Xero as a cloud native ‘one stop shop’ platform that enables the integration of a wide range of critical hotel functions in one place, eliminating a wide range of pain points for hotel managers,” Mr Lye said.

“Despite over a decade of strong growth establishing a leadership position, SiteMinder is still only scratching the surface of the potential opportunity.”